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 Table of Contents

1.0 Executive Summary.............................................................................................................................1

1.1 Mission........................................................................................................................................1
Chart: Highlights ......................................................................................................................2
1.2 Objectives ...................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Start-up Summary ......................................................................................................................2
Chart: Start-up .........................................................................................................................3
Table: Start-up .........................................................................................................................3
Table: Start-up Funding ..........................................................................................................4
2.2 Company Ownership .................................................................................................................4
3.0 Services................................................................................................................................................4
4.0 Market Analysis Summary..................................................................................................................5
4.1 Market Segmentation ................................................................................................................5
Table: Market Analysis ...........................................................................................................6
Chart: Market Analysis (Pie) ..................................................................................................6
4.2 Target Market Segment Strategy.............................................................................................6
4.3 Service Business Analysis........................................................................................................6
4.3.1 Competition and Buying Patterns................................................................................7
5.0 Strategy and Implementation Summary ............................................................................................7
5.1 Competitive Edge ......................................................................................................................7
5.2 Marketing Strategy.....................................................................................................................8
5.3 Sales Strategy............................................................................................................................8
5.3.1 Sales Forecast ..............................................................................................................8
Chart: Sales Monthly......................................................................................................9
Chart: Sales by Year......................................................................................................9
Table: Sales Forecast.................................................................................................10
5.4 Milestones ................................................................................................................................10
Table: Milestones..................................................................................................................10
Chart: Milestones ..................................................................................................................11
6.0 Web Plan Summary ..........................................................................................................................11
6.1 Website Marketing Strategy...................................................................................................11
6.2 Development Requirements ...................................................................................................11
7.0 Management Summary ....................................................................................................................11
7.1 Personnel Plan.........................................................................................................................12
Table: Personnel ...................................................................................................................12
8.0 Financial Plan ....................................................................................................................................12
8.1 Important Assumptions............................................................................................................12
Table: General Assumptions ...............................................................................................12
8.2 Break-even Analysis................................................................................................................12
Chart: Break-even Analysis .................................................................................................13
Table: Break-even Analysis .................................................................................................13
8.3 Projected Profit and Loss .......................................................................................................13
Chart: Profit Monthly .............................................................................................................14
Chart: Profit Yearly................................................................................................................14
Chart: Gross Margin Monthly ...............................................................................................15
Chart: Gross Margin Yearly..................................................................................................15
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Table: Profit and Loss ..........................................................................................................16
8.4 Projected Cash Flow...............................................................................................................16
Table: Cash Flow..................................................................................................................17
Chart: Cash ...........................................................................................................................18
8.5 Projected Balance Sheet ........................................................................................................19
Table: Balance Sheet ...........................................................................................................19
8.6 Business Ratios .......................................................................................................................20
Table: Ratios .........................................................................................................................21
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6

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1.0 Executive Summary

Sc an Lab Medical Imaging is a start-up company offering a wide range of medical image sc anning
tests for the New Bedford, Massachusetts community.

The Market

Sc an Lab will target insurance carriers. Insurance carriers use a bid submittal proc ess to set up
contrac ts with the various medical sc an service providers. In today's medical environment
these contac t are key bec ause 99% of the sc ans done are billed through insurance. Insurance
companies therefore are the gate keepers to this proc ess. Sc an Lab recognizes the importance
of getting insurance carriers approval and will work hard to get approved by all popular insurance
plans.

Once Sc an Lab has been approved by an insurance company, it will rely on referrals of
physicians to point their patients to Sc an Lab. Doc tors make referrals based on several fac tors
including geographic loc ation/convenience who they know, ac cepted forms of insurance, type
of scan, etc. It will be important to have a strong marketing and sales campaign that alerts
referring doctors to Sc an Lab's services.

Services

Sc an Lab offers a wide range of radiology-based medical sc anning tests. Sc an Lab has the latest
equipment and the expert medical training to interpret and provide valuable consultations to
the physicians who make the patient referrals to Sc an Lab.

Management

Sc an Lab will be lead by Dr. Carolyn Jones. Dr. Jones received her medical degree with a
specialization in radiology from the University of California San Diego, a nationally recognized
medical school for radiology. Dr. Jones performed her residency at John Hopkins, also nationally
recognized for their radiology program. Dr. Jones has prac ticed radiology for 13 years at a large
clinic in Boston.

1.1 Mission
It is Sc an Lab's mission to be recognized as the leader in medical sc anning technology in New
Bedford. This will be ac hieved by friendly service, flexible ac ceptance of insurance plans, and
ac curate analysis.

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1.2 Objectives
· To capture 40% of loc al physicians' business within two years.
· To reac h profitability within two years.
· To double sales by year three.

1.3 Keys to Success

· Only purchase medical equipment that has demand within the community.
· Provide fast, friendly service with accurate readings.
· Employ strict financial controls to help manage the expensive capital costs associated
with medical imaging equipment.

2.0 Company Summary

Sc an Lab has been formed as a Massac husetts corporation. It is solely owned by Carolyn Jones.

2.1 Start-up Summary

Sc an Lab will need to purchase the nec essary equipment for the clinic.

· Office furniture for four exam rooms. This equipment will be purchased used in good
condition. This will be done as a cost saving measure.

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· Receptionist office furniture and assorted waiting room furniture (this will also be
purchased in good, used condition).
· Three computers, one with QuickBooks Pro, all with Microsoft Office, a central laser
printer and broadband Internet connection.
· Medical scanning devices:
° X-ray mac hine
° Ultra sound unit
° CAT scan imaging mac hine
° MRI imaging mac hine

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $3,000
Stationery etc. $300
Brochures $300
Consultants $2,000
Insurance $3,000
Rent $2,000
Total Start-up Expenses $10,600

Start-up Assets
Cash Required $317,900
Other Current Assets $0
Long-term Assets $861,500
Total Assets $1,179,400

Total Requirements $1,190,000

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Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $10,600
Start-up Assets to Fund $1,179,400
Total Funding Required $1,190,000

Assets
Non-cash Assets from Start-up $861,500
Cash Requirements from Start-up $317,900
Additional Cash Raised $0
Cash Balance on Starting Date $317,900
Total Assets $1,179,400

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $860,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $860,000

Capital

Planned Investment
Dr. Jones $180,000
Investor $150,000
Additional Investment Requirement $0
Total Planned Investment $330,000

Loss at Start-up (Start-up Expenses) ($10,600)

Total Capital $319,400

Total Capital and Liabilities $1,179,400

Total Funding $1,190,000

2.2 Company Ownership

Carolyn Jones is the sole stoc kholder of the Sc an Lab corporation.

3.0 Services
Sc an Lab offers New Bedford physicians a wide range of diagnostic scanning tests. Due to the
high cost of sc anning equipment for oc casional use, most small clinics and prac tices use an
outside service provider for scanning needs. The following scans will be offered:

· X-Ray: An X-ray uses invisible electromagnetic energy beams to produce images of

internal tissues, bones, and organs on film. X-rays are used for numerous reasons but
work best to find tumors or bone injuries.

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· Ultrasound: This technology sends sound waves into the body, recording the
reflection. Ultrasound is used for a detailed assessment of blood flow and for views of
soft tissue and anatomical body structure.

· CAT Scan: This is a diagnostic technology that uses a combination of x-rays and
computer technology to produce cross- sectional images ("slices") in a horizontal and
vertical orientation. A CAT sc an can show detailed images of any part of the body
including bones, muscles, fat, and organs. CAT scans are more detailed than traditional
x-rays and have lower releases of radiation. CAT sc ans are often used to diagnose
tumors, evaluate internal bleeding or investigate internal injuries or damage.

· MRI: This technology harnesses magnetic energy. The patient is plac ed in a tube or on
a bed where magnetic fields are applied to the body. The reac tion by the body when
the magnetic fields are applied and relaxed are noted by a computer which has been
recording data throughout the proc ess. MRIs are the premier scanning device for
extremities, espec ially joints, as well as for imaging the upper spine and lower bac k.

Diagnostic scanning requires proper analysis by a radiologist to analyze the scans.

4.0 Market Analysis Summary

Sc an Lab has identified two customer segments that they will target: medical insurance
carriers and physicians. For many patients the insurance company mandates who can provide
sc anning services. Therefore, the driving force to getting customers is attrac ting the large
insurance carriers. Sc an Lab has been in negotiations with the three largest carriers in the
state and all have informally ac cepted Sc an Lab's bid proposal.

The second customer group is the physicians. While the insurance company will mandate what
labs are ac ceptable for their insurance plan, it is the doc tor's choice where they recommend
their patients goes.

4.1 Market Segmentation

Sc an Lab will target the three largest medical insurance carriers: Aetna, Cigna, and Prudential.
Smaller ones will also be targeted later.

Sc an Lab has been involved in negotiations with these three insurance carriers to develop an
arrangement for Sc an Lab to be an approved fac ility. The next step is the submission of a bid,
which is primarily based on price. The lab must agree to rates that the insurance companies
have set forth. A secondary consideration is the ability of the lab to adhere to spec ific filing
and billing proc edures.

The second target market segment is physicians. Physicians make referrals based on numerous
fac tors including:

· Who they know.

· Who the patient's insurance company is.
· What type of scan the patient is receiving.

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· Convenience of loc ation relative to their office or to the patient's home.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Insurance companies 1% 21 21 21 21 21 0.00%
Physicians 4% 235 244 254 264 275 4.01%
Total 3.70% 256 265 275 285 296 3.70%

4.2 Target Market Segment Strategy

The insurance companies dec ide what scanning fac ilities are ac ceptable relative to their
insurance plan. Once the fac ility has been approved, the approval is typically good for one to
two years at which point a new bid must be submitted.

Physicians direct the patient to where they must go for a sc an. Because Sc an Lab is loc ated
within a professional building with many doctors, this level of convenience with often prompt
the doctor to immediately recommend Sc an Lab.

4.3 Service Business Analysis

The medical imaging industry operates under two models: a large clinic or prac tice that
purchases the equipment for the use of their physicians, and outside service providers.

Only large clinics and prac tices can justify buying their own scanning equipment. For a small

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clinic or prac tice, the high equipment cost with low use rate makes cost per use expensive.

Sc an Lab's direct competitors offer their services to all physicians and ac cept a wide range of
insurance plans. These competitors rarely offer services beyond medical imagine test and
radiologist analysis. The medical sc anning industry can be profitable if there is not over
capacity of the scanning mac hines in the area. A profitable capacity is to have approximately
five MRIs for every 100,000 people. Currently, New Bedford, with a population of 300,000 has 12.

4.3.1 Competition and Buying Patterns

There are nine direct competitors in the area. The large ones are detailed below:

· Massachusetts Imaging Center: This company operates three centers of imaging

equipment. This company is large, while they offer competent radiologist analysis, the
setting is somewhat fac tory like where patients bec ome numbers who are shuffled
through.

· Bedford Scanning: This is a small fac ility with one part time radiologist on staff. They
only have an MRI and CAT sc an, they do not offer any other types of imaging services.

· Radiologist Imaging: This fac ility is similar to Sc an Lab but is loc ated on the far side
of town, a 25 minute drive away, therefore this fac ility seems to serve a more regional
customer base due to their non-centralized loc ation.

Sc an Lab also has indirect competition from clinics and large prac tices with their own scanning
equipment. This group does not serve outside physicians so it is only a threat if they recruit
doctors, that use Sc an Lab, away from private prac tice.

5.0 Strategy and Implementation Summary

Sc an Lab will leverage its competitive edge of having the most advanced equipment with a
seasoned, nationally recognized radiologist providing all of the analysis. Sc an Lab will employ a
marketing strategy that will communicate the message that offers state of the art technology
and medical analysis, developing an awareness regarding Sc an Lab's strengths and
distinctiveness.

There is not a significant amount of work that needs to oc cur to market to the insurance
companies. This ac tivity is handled by bid submission. Most ac tivities directed at the insurance
companies will oc cur through the sales campaign. Sc an Lab will also embark on a sales strategy
that has the goal of converting qualified doctors into referring doctors, Sc an Lab's source of
patients. The following three sections provides this analysis.

5.1 Competitive Edge

Sc an Lab will a nationally recognized expert radiologist in c harge of all analysis. Dr. Carolyn Jones
has been prac ticing radiology for 13 years, has published over 14 articles in renowned medical
journals and is often asked to be a speaker at national engagements. Recently, she was the
keynote speaker for the American Assoc iation of Radiologists Annual Conference where she
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described a new technique of using contrast in medical imaging that yielded a 34% increase in
detail. A medical imaging scan is only as good as the analysis of the sc an, therefore it is of
significant value to offer a service where you have a nationally recognized expert offering the
consultation to the referring doctor.

5.2 Marketing Strategy

Sc an Lab will use several methods to communicate that it offers the most advanced
technology and the best expert radiology analysis. This message will be communicate through
various methods:

· Yellow Pages: While the Yellow Pages are not as targeted as other methods of
communication, these advertisements will be nec essary as many people turn to the pages
when they do not have a specific service provider in mind. The ads are proven to be cost
effective.

· Circulars: These will be pamphlets that are sent out to loc al physicians. The pamphlet
will serve to introduce Sc an Lab and detail the different services that it offers. It will also
provide information on Dr. Carolyn Jones and will include bac kground into her
professional ac complishments and ac tivities.

· Networking: Dr. Jones recognizes the importance of networking, getting to know the
physicians that work in New Bedford. A high percentage of referrals are made based on
personal and professional contac ts so networking is a very effective method of increasing
the number of referrals. Dr. Jones will be ac tive in the numerous organizations and
committees that are present within the medical community.

5.3 Sales Strategy

Sc an Lab's sales strategy will be to convert a qualified lead into a referring physician. This will be
done through the emphasis of Dr. Jones' strength and expertise in the field of radiology. The
medical scanning laboratories service both patients and doc tors.

For patients the scanning must be convenient, pleasant, and ac cept most insurance plans. For
physicians, it must be a high-quality radiologist analysis. The better the analysis, the more
ac curate information that the radiologists can offer in the consultation to the referring physician.

Sc an Lab will be networking with various insurance carriers. The first step is to determine who
the key contac t at the insurance company is. These contac ts will be useful in providing
information on what is expec ted in the submitted bid.

5.3.1 Sales Forecast

The sales forecast adopts a conservative approach to projecting future sales. As a start-up
organization, Sc an Lab recognizes that sales will be slow initially but by the seventh month sales
will be steady and grow as the marketing efforts are developed.

The sales forecast is broken down by the type of service provided and displayed in the
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following table. The charts give a visual representation of monthly and yearly figures.

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Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
X-ray $124,292 $130,500 $143,550
Ultrasound $73,332 $77,000 $84,700
CAT scan $136,721 $143,000 $157,300
MRI $87,999 $92,000 $101,200
Total Sales $422,344 $442,500 $486,750

Direct Cost of Sales Year 1 Year 2 Year 3

X-ray $28,587 $30,000 $30,900
Ultrasound $16,866 $18,000 $18,540
CAT scan $31,446 $33,000 $34,000
MRI $20,240 $21,300 $22,000
Subtotal Direct Cost of Sales $97,139 $102,300 $105,440

5.4 Milestones
Sc an Lab has chosen several quantifiable milestones that have been developed as goals for
the organization to ac hieve. The following table details the specific milestones, the time frame
that has been estimated for completion of the milestone, and the specific employee responsible.

Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager Department

Business plan completion 6/1/2003 12/1/2003 $0 Carolyn Business
Development
Secure lease 12/1/2003 2/28/2004 $0 Carolyn Operations
Equipment purchases 1/1/2004 3/1/2004 $0 Carolyn Operations
Facility open 3/1/2004 3/30/2004 $0 Carolyn Operations
Profitability 10/30/2004 1/31/2005 $0 Carolyn Accounting
Totals $0

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6.0 Web Plan Summary

Sc an Lab will have a website which will provide information regarding the services offered and Dr.
Jones professional experience.

6.1 Website Marketing Strategy

Sc an Lab will use two simple marketing techniques to alert prospec tive customers to the site.
The first is the prominent display of the Web address on all literature that Sc an Lab has. The
second is submitting Sc an Labs website URL to multiple search engines. This will ensure that if
a customer types "New Bedford MRI" into a search engine and they would be brought to www.
sc anlab.com.

6.2 Development Requirements

The website will be designed and built by a loc al computer science student.

7.0 Management Summary

Sc an Lab will be lead by Dr. Carolyn Jones. Dr. Jones received her medical degree from The
University of California San Diego, world renowned for their radiology. Dr. Jones moved to the
Northeast and prac ticed her residency at John Hopkins, after which she went to work for a

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large clinic in Boston.

Dr. Jones has published 14 articles and is frequently asked to present her papers at conferences.

7.1 Personnel Plan

Sc an Lab will require the following positions/responsibilities:

· Dr. Jones: In addition to being the resident radiologist, she will also be responsible for
business development, and some marketing and sales.

· Technicians: Four people will be responsible for the operation of the mac hines.

· Administration: Two people will be responsible for the clerical duties and bookkeeping.

Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3
Dr. Jones $60,000 $61,800 $63,654
Technicians $48,000 $49,440 $50,923
Other $19,200 $19,776 $20,269
Total People 5 5 5

Total Payroll $127,200 $131,016 $134,846

8.0 Financial Plan

The following sections will outline the financial planning for Sc an Lab.

8.1 Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis indicates what is needed in monthly revenue to reac h the break-even

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point.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $40,582

Assumptions:
Average Percent Variable Cost 23%
Estimated Monthly Fixed Cost $31,248

8.3 Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

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Table: Profit and Loss

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $422,344 $442,500 $486,750
Direct Cost of Sales $97,139 $102,300 $105,440
Other Costs of Sales $0 $0 $0
Total Cost of Sales $97,139 $102,300 $105,440

Gross Margin $325,205 $340,200 $381,310

Gross Margin % 77.00% 76.88% 78.34%

Expenses
Payroll $127,200 $131,016 $134,846
Sales and Marketing and Other Expenses $6,000 $0 $0
Depreciation $172,300 $0 $0
Rent $24,000 $0 $0
Utilities $6,000 $0 $0
Insurance $18,000 $0 $0
Payroll Taxes $19,080 $0 $0
Other $2,400 $0 $0

Total Operating Expenses $374,980 $131,016 $134,846

Profit Before Interest and Taxes ($49,775) $209,184 $246,464

EBITDA $122,525 $209,184 $246,464
Interest Expense $79,500 $68,000 $56,000
Taxes Incurred $0 $42,355 $57,139

Net Profit ($129,275) $98,829 $133,325

Net Profit/Sales -30.61% 22.33% 27.39%

8.4 Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.

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Table: Cash Flow

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $105,586 $110,625 $121,688
Cash from Receivables $240,226 $328,223 $357,044
Subtotal Cash from Operations $345,812 $438,848 $478,732

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $345,812 $438,848 $478,732

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $127,200 $131,016 $134,846
Bill Payments $227,987 $219,308 $218,092
Subtotal Spent on Operations $355,187 $350,324 $352,938

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $120,000 $120,000 $120,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $475,187 $470,324 $472,938

Net Cash Flow ($129,375) ($31,477) $5,793

Cash Balance $188,525 $157,048 $162,841

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8.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets

Current Assets
Cash $188,525 $157,048 $162,841
Accounts Receivable $76,532 $80,184 $88,203
Other Current Assets $0 $0 $0
Total Current Assets $265,057 $237,232 $251,044

Long-term Assets
Long-term Assets $861,500 $861,500 $861,500
Accumulated Depreciation $172,300 $172,300 $172,300
Total Long-term Assets $689,200 $689,200 $689,200
Total Assets $954,257 $926,433 $940,244

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $24,132 $17,479 $17,965
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $24,132 $17,479 $17,965

Long-term Liabilities $740,000 $620,000 $500,000

Total Liabilities $764,132 $637,479 $517,965

Paid-in Capital $330,000 $330,000 $330,000

Retained Earnings ($10,600) ($139,875) ($41,046)
Earnings ($129,275) $98,829 $133,325
Total Capital $190,125 $288,954 $422,279
Total Liabilities and Capital $954,257 $926,433 $940,244

Net Worth $190,125 $288,954 $422,279

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8.6 Business Ratios

The following table details Business Ratios as they relate to Sc an Lab, as well as the Diagnostic
Imaging Center industry, NAICS code 612512, that it participates in.

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Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 4.77% 10.00% 8.83%

Percent of Total Assets

Accounts Receivable 8.02% 8.66% 9.38% 29.41%
Other Current Assets 0.00% 0.00% 0.00% 48.00%
Total Current Assets 27.78% 25.61% 26.70% 80.30%
Long-term Assets 72.22% 74.39% 73.30% 19.70%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 2.53% 1.89% 1.91% 30.82%

Long-term Liabilities 77.55% 66.92% 53.18% 21.77%
Total Liabilities 80.08% 68.81% 55.09% 52.59%
Net Worth 19.92% 31.19% 44.91% 47.41%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 77.00% 76.88% 78.34% 100.00%
Selling, General & Administrative Expenses 102.84% 0.00% 0.00% 66.55%
Advertising Expenses 0.00% 0.00% 0.00% 0.85%
Profit Before Interest and Taxes -11.79% 47.27% 50.63% 5.72%

Main Ratios
Current 10.98 13.57 13.97 1.77
Quick 10.98 13.57 13.97 1.49
Total Debt to Total Assets 80.08% 68.81% 55.09% 54.16%
Pre-tax Return on Net Worth -67.99% 48.86% 45.10% 6.71%
Pre-tax Return on Assets -13.55% 15.24% 20.26% 14.64%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -30.61% 22.33% 27.39% n.a
Return on Equity -67.99% 34.20% 31.57% n.a

Activity Ratios
Accounts Receivable Turnover 4.14 4.14 4.14 n.a
Collection Days 56 86 84 n.a
Accounts Payable Turnover 10.45 12.17 12.17 n.a
Payment Days 27 36 30 n.a
Total Asset Turnover 0.44 0.48 0.52 n.a

Debt Ratios
Debt to Net Worth 4.02 2.21 1.23 n.a
Current Liab. to Liab. 0.03 0.03 0.03 n.a

Liquidity Ratios
Net Working Capital $240,925 $219,754 $233,079 n.a
Interest Coverage -0.63 3.08 4.40 n.a

Additional Ratios
Assets to Sales 2.26 2.09 1.93 n.a
Current Debt/Total Assets 3% 2% 2% n.a
Acid Test 7.81 8.99 9.06 n.a
Sales/Net Worth 2.22 1.53 1.15 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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 Appendix
Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
X-ray 0% $0 $0 $5,500 $8,565 $10,005 $12,454 $13,121 $14,005 $14,989 $15,114 $15,265 $15,274
Ultrasound 0% $0 $0 $3,245 $5,053 $5,903 $7,348 $7,741 $8,263 $8,844 $8,917 $9,006 $9,012
CAT scan 0% $0 $0 $6,050 $9,422 $11,006 $13,699 $14,433 $15,406 $16,488 $16,625 $16,792 $16,801
MRI 0% $0 $0 $3,894 $6,064 $7,084 $8,817 $9,290 $9,916 $10,612 $10,701 $10,808 $10,814
Total Sales $0 $0 $18,689 $29,104 $33,997 $42,319 $44,585 $47,589 $50,933 $51,357 $51,870 $51,901

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
X-ray $0 $0 $1,265 $1,970 $2,301 $2,864 $3,018 $3,221 $3,447 $3,476 $3,511 $3,513
Ultrasound $0 $0 $746 $1,162 $1,358 $1,690 $1,781 $1,900 $2,034 $2,051 $2,071 $2,073
CAT scan $0 $0 $1,392 $2,167 $2,531 $3,151 $3,320 $3,543 $3,792 $3,824 $3,862 $3,864
MRI $0 $0 $896 $1,395 $1,629 $2,028 $2,137 $2,281 $2,441 $2,461 $2,486 $2,487
Subtotal Direct Cost of Sales $0 $0 $4,298 $6,694 $7,819 $9,733 $10,255 $10,945 $11,715 $11,812 $11,930 $11,937

Page 1
 Appendix
Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Dr. Jones 0% $0 $0 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Technicians 0% $0 $0 $0 $3,000 $3,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Other 0% $0 $0 $0 $1,200 $1,200 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Total People 0 0 0 3 3 5 5 5 5 5 5 5

Total Payroll $0 $0 $6,000 $10,200 $10,200 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400

Page 2
 Appendix
Table: General Assumptions

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3
 Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $18,689 $29,104 $33,997 $42,319 $44,585 $47,589 $50,933 $51,357 $51,870 $51,901
Direct Cost of Sales $0 $0 $4,298 $6,694 $7,819 $9,733 $10,255 $10,945 $11,715 $11,812 $11,930 $11,937
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $4,298 $6,694 $7,819 $9,733 $10,255 $10,945 $11,715 $11,812 $11,930 $11,937

Gross Margin $0 $0 $14,391 $22,410 $26,178 $32,585 $34,331 $36,644 $39,218 $39,545 $39,940 $39,964
Gross Margin % 0.00% 0.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%

Expenses
Payroll $0 $0 $6,000 $10,200 $10,200 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400
Sales and Marketing and Other $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Expenses
Depreciation $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Payroll Taxes 15% $0 $0 $900 $1,530 $1,530 $2,160 $2,160 $2,160 $2,160 $2,160 $2,160 $2,160
Other $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Total Operating Expenses $19,058 $19,058 $25,958 $30,788 $30,788 $35,618 $35,618 $35,618 $35,618 $35,618 $35,618 $35,618

Profit Before Interest and Taxes ($19,058) ($19,058) ($11,568) ($8,378) ($4,611) ($3,033) ($1,288) $1,025 $3,600 $3,927 $4,322 $4,346
EBITDA ($4,700) ($4,700) $2,791 $5,980 $9,748 $11,325 $13,071 $15,384 $17,958 $18,285 $18,680 $18,704
Interest Expense $7,083 $7,000 $6,917 $6,833 $6,750 $6,667 $6,583 $6,500 $6,417 $6,333 $6,250 $6,167
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($26,142) ($26,058) ($18,484) ($15,212) ($11,361) ($9,700) ($7,871) ($5,475) ($2,817) ($2,406) ($1,928) ($1,821)
Net Profit/Sales 0.00% 0.00% -98.91% -52.27% -33.42% -22.92% -17.65% -11.50% -5.53% -4.69% -3.72% -3.51%

Page 4
 Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales $0 $0 $4,672 $7,276 $8,499 $10,580 $11,146 $11,897 $12,733 $12,839 $12,968 $12,975
Cash from Receivables $0 $0 $0 $467 $14,277 $21,950 $25,706 $31,796 $33,514 $35,775 $38,210 $38,531
Subtotal Cash from Operations $0 $0 $4,672 $7,743 $22,776 $32,530 $36,852 $43,693 $46,247 $48,615 $51,178 $51,506

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $4,672 $7,743 $22,776 $32,530 $36,852 $43,693 $46,247 $48,615 $51,178 $51,506

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $0 $0 $6,000 $10,200 $10,200 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400
Bill Payments $393 $11,781 $11,871 $16,913 $19,792 $20,881 $23,275 $23,718 $24,328 $24,992 $25,007 $25,038
Subtotal Spent on Operations $393 $11,781 $17,871 $27,113 $29,992 $35,281 $37,675 $38,118 $38,728 $39,392 $39,407 $39,438

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $10,393 $21,781 $27,871 $37,113 $39,992 $45,281 $47,675 $48,118 $48,728 $49,392 $49,407 $49,438

Net Cash Flow ($10,393) ($21,781) ($23,198) ($29,370) ($17,216) ($12,751) ($10,822) ($4,425) ($2,481) ($777) $1,771 $2,068
Cash Balance $307,507 $285,727 $262,528 $233,158 $215,943 $203,191 $192,369 $187,944 $185,462 $184,685 $186,456 $188,525

Page 5
 Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $317,900 $307,507 $285,727 $262,528 $233,158 $215,943 $203,191 $192,369 $187,944 $185,462 $184,685 $186,456 $188,525
Accounts Receivable $0 $0 $0 $14,017 $35,377 $46,598 $56,387 $64,120 $68,016 $72,701 $75,444 $76,137 $76,532
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $317,900 $307,507 $285,727 $276,545 $268,536 $262,541 $259,578 $256,489 $255,960 $258,164 $260,130 $262,593 $265,057

Long-term Assets
Long-term Assets $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500
Accumulated Depreciation $0 $14,358 $28,717 $43,075 $57,433 $71,792 $86,150 $100,508 $114,866 $129,225 $143,583 $157,941 $172,300
Total Long-term Assets $861,500 $847,142 $832,783 $818,425 $804,067 $789,709 $775,350 $760,992 $746,634 $732,275 $717,917 $703,559 $689,200
Total Assets $1,179,400 $1,154,649 $1,118,510 $1,094,970 $1,072,603 $1,052,249 $1,034,928 $1,017,481 $1,002,593 $990,439 $978,047 $966,152 $954,257

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $11,391 $11,310 $16,255 $19,099 $20,106 $22,485 $22,908 $23,495 $24,158 $24,172 $24,206 $24,132
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $11,391 $11,310 $16,255 $19,099 $20,106 $22,485 $22,908 $23,495 $24,158 $24,172 $24,206 $24,132

Long-term Liabilities $860,000 $850,000 $840,000 $830,000 $820,000 $810,000 $800,000 $790,000 $780,000 $770,000 $760,000 $750,000 $740,000
Total Liabilities $860,000 $861,391 $851,310 $846,255 $839,099 $830,106 $822,485 $812,908 $803,495 $794,158 $784,172 $774,206 $764,132

Paid-in Capital $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000
Retained Earnings ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600)
Earnings $0 ($26,142) ($52,200) ($70,684) ($85,896) ($97,257) ($106,956) ($114,827) ($120,302) ($123,119) ($125,525) ($127,453) ($129,275)
Total Capital $319,400 $293,258 $267,200 $248,716 $233,504 $222,143 $212,444 $204,573 $199,098 $196,281 $193,875 $191,947 $190,125
Total Liabilities and Capital $1,179,400 $1,154,649 $1,118,510 $1,094,970 $1,072,603 $1,052,249 $1,034,928 $1,017,481 $1,002,593 $990,439 $978,047 $966,152 $954,257

Net Worth $319,400 $293,258 $267,200 $248,716 $233,504 $222,143 $212,444 $204,573 $199,098 $196,281 $193,875 $191,947 $190,125

Page 6